Canada could become a nation of renters in the near future, offering opportunities for overseas property investors in the Canadian private rental sector.
If millennials are right about the state of their finances, there’s a big change coming to how Canadians live. After years of elevated and seemingly constantly rising property prices, barely half will be able to afford a home of their own, remaining as renters.
A new study carried out for tax and advisory firm KPMG found that only 54 per cent of those surveyed aged 23 to 38 believe they will ever own a home.
Current home ownership rates in Canada are above 70 per cent for the generations aged 35 and above, but it looks like that will change considerably.
Canada is headed towards being a country of renters. And that means the country will need more rental housing, as a share of all housing, than it has had in the past.
Rental rates have seen a large spike in recent years, and the experts say it’s because of increased demand. Many would-be buyers have to stay longer in rental housing, due to high house prices, putting upward pressure on rental rates.
At the same time, Canadian population growth has heated up to the fastest rate in decades, with the federal government hiking immigration levels to above 300,000 in recent years. The target is expected to rise again to 350,000 by 2021. Add to that natural population growth, and Canada is adding half a million residents per year.
Royal Bank of Canada estimated earlier this year that Toronto would need to double the amount apartment construction (condos and purpose-built apartments) to keep up with population growth.
At the provincial level, both Ontario and British Columbia are moving forward, to some degree, with plans to allow more densification. The Ontario government got rid of the previous Liberal government’s rent controls, in an effort to get more rentals built.
It seems that the demand from renters in Canada is only set to grow.